Norway's sovereign wealth fund plans to cut U.S. Treasury holdings

Norway's $2.3 trillion sovereign wealth fund has proposed reducing its allocation to government bonds, a change that would mainly lower its holdings of U.S. Treasurys. The fund said the move is intended to improve diversification and seek better returns while keeping enough liquidity for market stress. In a letter to Norway's Finance Ministry released Friday, Norges Bank Investment Management recommended cutting the government bond share of its portfolio from 70% to 50%. Under the plan, Treasury holdings would fall from 34.1% to 21.9%, while Japanese government bonds would increase and euroarea exposure would decline slightly. The fund also wants to shift more of its fixedincome portfolio into nongovernment bonds, including corporate debt and mortgagebacked securities. Executives said these assets could offer higher premiums and may help reduce volatility over time. The proposal comes as Treasury markets face pressure from higher longterm yields and concerns about U.S. debt levels.